The nation's labor leaders are
split into two feuding camps over how to respond to the stock trading under investigation at Ullico, the beleaguered union-owned insurance company, and to the company's deepening financial crisis.

Some, led by John J. Sweeney, the
A.F.L.-C.I.O. president, are pressing Ullico directors who made more than $6
million trading the insurer's stock to surrender their profits. With the trades
a subject of three federal investigations, these labor leaders say giving up
those profits to the company would be a step toward ending a profound embarrassment
to the labor movement and restoring confidence in Ullico, which some directors
say may not survive without major changes.

But those in the other camp, led
by Martin J. Maddaloni, president of the plumbers' union, and including other officials
in the building trades unions, say there is no need for such "disgorgement."
They maintain that the directors who made large trading profits did nothing
wrong and acted no differently from directors on many corporate boards.

In the deal at issue, many company
directors bought Ullico stock in November 1999 at a price set by the board,
knowing that the board would soon most likely reset the share price far higher.
A year later 17 of those directors, half of what was then the entire board,
sold the stock back to the company at nearly three times the purchase price,
knowing that the board was likely to reset the stock price far lower. All the
17 sellers were current or former union officials.

An investigative report by James
R. Thompson, a special counsel retained by the board, found that the directors
had enriched themselves at the expense of other shareholders, mainly unions and
their pension funds, which had not been granted the same trading opportunities.
Mr. Thompson, former governor of Illinois, found that a forceful argument could
be made that Ullico's chairman and chief executive, Robert A. Georgine, had
violated his duties to the company by engineering the transactions.

"All this has seriously
undermined the labor movement," said Charles Craver, a professor of labor
law at George Washington University. "It's bad enough when we see these
shenanigans at Enron or WorldCom, but when union officials get involved in anything
that has an appearance of impropriety and it looks as if they're benefiting
like capitalists, workers begin to question whose side they're on."

Like Mr. Sweeney, the presidents
of the laborers' union, the operating engineers and the hotel and restaurant
employees have called on Ullico's directors to return their trading profits.
They point to the decision by Douglas J. McCarron, president of the carpenters'
union, to return more than $200,000 he made.

"I think disgorgement by
everyone would be a step in the right direction," said the laborers'
president, Terence O'Sullivan, a Ullico director who did not engage in the
trading. "All this has been a distraction. It's time to focus the board's
time and attention on ensuring the future success of Ullico on behalf of the
men and women of organized labor."

Ullico was founded in 1925 to
provide affordable life insurance to blue-collar union members. Its value
soared in the late 1990's after its $7.6 million investment in Global Crossing,
a telecommunications company, had skyrocketed to more than $1 billion. But by
2000, Global Crossing shares had begun a nosedive, cutting Ullico's value and
fostering its financial crisis.

Some Ullico directors say
privately that it is time for Mr. Georgine to step down. They maintain that if
the current management remains, it will be hard for Ullico to obtain the $50
million in new investment that he says it needs.

Many labor leaders say they were
shocked to learn how much Mr. Georgine, former president of the A.F.L.-C.I.O.'s
building trades department, had earned at Ullico. Mr. Thompson calculated that
Mr. Georgine, who made $6 million in Ullico stock trades separate from the
arrangement on which the federal inquiries are focused, received $10.7 million
from 1999 to 2001, including the proceeds of those trades. Two directors said
that in addition, the board had established an $11 million deferred compensation
plan for him. Further, Mr. Georgine had Ullico buy a corporate jet that board
members say costs $3 million a year to operate.

At a board meeting on March 28,
several directors said, Mr. Georgine proposed returning his trading profits but
met resistance from members who understood that this would increase pressure on
them to return their own.

Thomas C. Green, a lawyer for
Ullico, defends the stock trades, saying they were consistent with what
directors do at other companies.

"Considering the success of
Ullico's portfolio, the compensation for Mr. Georgine and other officers is not
just compatible with what exists in other areas of our commercial society, it's
less than what's comparable," Mr. Green said. "There's no fundamental
unfairness here. No one was disadvantaged in some classic notion of someone
taking advantage."

Several union officials critical
of Mr. Georgine say that after Mr. Thompson's report was issued to the board
last fall, the chairman and other directors received bad advice from Ullico's
outside lawyers, a circumstance that, these officials say, helped cause the
controversy to fester. According to these officials, Ullico's lawyers urged the
directors to dig in, telling them that Mr. Thompson was wrong to have concluded
that they had breached their fiduciary duties. The lawyers also told the board
that Mr. Thompson had found no violations of law.

In a highly unusual statement last
Friday, Mr. Thompson accused Ullico and its lawyers of making defamatory
statements on one hand, in describing his inquiry as inadequate, while on the
other misrepresenting its findings to mount a public defense. Far from the
assertion that his investigation found no violations of law, he said, he
actually found compelling evidence of state securities law violations.